William Webster, Director of Central Intelligence
before the Senate Armed Services Committee
January 23, 1990

The outcome of President Gorbachev's attempt to modernize the Soviet economy and to rejuvenate its political system is still in doubt. Although we welcome many of the changes taking place, it is important also to remember that the outcome in Eastern Europe, and indeed in

GE 2 TXT203 the Soviet Union, is uncertain and the situations there in flux.

Overall, the conventional threat to the United States and our alliance partners in Europe has decreased as a result of changes in Eastern Europe and Soviet force reductions. But, Soviet strategic forces continue to be modernized and their military research and development programs continue to receive generous funding. Notwithstanding the crisis affecting the country as a whole, Soviet strategic forces remain unimpaired. For these reasons, it is essential that we maintain a strong intelligence capability.

The Soviet Union

Soviet leaders will be preoccupied with domestic problems for years to come. Poor economic performance, the Communist party's diminishing power, and the escalating demands of non-Russian nationalities will remain serious issues.

Gorbachev typically responds to challenges by initiating new reforms, but this has generated demands for even more rapid change. Although he has attempted to slow reforms in some areas, he is committed to implementing a sweeping decentralization and liberalization of the Soviet system. A major reversal of his policies could only come with his removal.

While this does not seem likely now, there can be no doubt that mounting turmoil and economic distress will be of great concern to hardliners, and many others in the Soviet Union as well.

Nonetheless, we can probably expect a continued diminution -- but not elimination -- of Soviet threats to us interests. Gorbachev -- and any successors -- will have an even more pressing need than in the past few years to reduce the burden of defense spending and to transfer resources to civilian production.

The Continuing Strategic Threat

Important changes have occurred in the strategic arena. Last year for the first time there was a reduction in the number of Soviet strategic launchers as older systems were retired more rapidly than new ones were introduced. S.T.A.R.T. force levels have become the baseline for Soviet strategic planning, and new Soviet programs have been altered accordingly.

Nevertheless, the bulk of the evidence about Soviet strategic forces and programs shows a vigorous, broad-based modernization effort that is improving their overall strategic capabilities. Two new silo-based ICBM systems were deployed last year, and the survivability of Soviet forces has been enhanced by the continued deployment of SS- 25 road-mobile and SS-24 rail-mobile ICBMs. New Typhoon and Delta-IV ballistic missile submarines were launched and additional Delta-IVs are under construction.

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Their future ballistic missile submarine force will be smaller, but subs will be equipped almost entirely with more capable long-range missiles. New blackjack strategic bombers have also been deployed, but in smaller numbers than previously projected, a cutback that goes beyond what is required by S.T.A.R.T.

The Soviets continue to modernize all elements of their strategic defense forces. The antisubmarine warfare effort has made some important gains, but the Soviets will be unable at least in this decade to threaten U.S. subs in the open ocean. Air defense modernization is also proceeding on various fronts, and the new moscow abm defense became operational last year.

The continued modernization of Soviet strategic forces makes it essential that Intelligence support be able to monitor their capabilities so that our own programs remain adequate.

Europe

The changes in Eastern Europe and the Soviet Union unavoidably affect both the political and military aspects of the NATO Alliance. The central question is the future of Germany. Because of very rapid change in the Warsaw Pact countries, and the uncertainty of the outcome, the United States and its allies will need to remain in close coordination on issues that affect all of us.

In Eastern Europe, unchallenged communist control has ended and the ties of those regimes to Moscow have been fundamentally altered.

But the internal situations in most of the countries will remain unsettled, probably for an extended period. All face great challenges in trying to develop democratic and market systems, but a return to Stalinist dictatorships is unlikely.

We have kept a close watch as the USSR has unilaterally reduced its forces in the European theater over the last year. Its drawdown appears to be on schedule with what President Gorbachev promised in his United Nations speech. As a result, Soviet and Warsaw Pact strength and capabilities have declined. The reductions probably lengthen the time it would take for the Soviets to mobilize for any large-scale attack in Europe.

In addition, Soviet military influence in Eastern Europe is rapidly diminishing because of the force reductions, the expectation of further Soviet drawdowns through a CFE Agreement, and the radically changed political environment in the region. Moscow is not likely to be confident, therefore, of Eastern European readiness to respond to Soviet requirements.

Asia

Continuity and change will challenge U.S. interests in East Asia as well. In particular, our concerns about the military strength and intentions of North Korea's dictators

GE 4 TXT203 remain high. The regime there is isolated, undermined by a weak economy, and committed to reinforce its already formidable armed forces. Dialogue with South Korea so far has not confirmed that P'Yongyang wants to alter its antagonistic relationship with Seoul.

China's crackdown on demonstrators in Tiananmen Square last spring, followed by its return to more traditional doctrines, has thus far affected the tone more than the direction of its foreign policy. More popular discontent and protest, or an open split in Beijing's leadership, remain profound sources of potential future instability.

The attempted coup against Philippine President Aquino last December is the latest symptom of the continuing threat to her government. Military discontent, political disputes, and the communist insurgency are likely to persist.

In Cambodia, the success of the resistance in seizing territory has called into question the staying power of the Vietnamese-installed Hun Sen regime. At the same time, however, the relative strength of the Khmer Rouge compared to the non-communist forces has raised concern that Phnom Penh's collapse could open the way for the Khmer Rouge without a diplomatic settlement that constrains the Khmer Rouge and strengthens the non-communists, the prospect is for sustained fighting that will likely diminish the chances for the installation of a transitional regime that could lead to a democratically elected Cambodian government.

Middle East

In the Middle East, local antagonisms remain a major danger. Regional leaders will be inhibited in their traditional game of pitting the superpowers against each other. As a result, local disputes are now less likely to trigger East-West confrontation, but may be more likely to occur.

We may now have a better chance of achieving a resolution of the conflict in Afghanistan that brings stability to that country and the region while allowing the Afghans to determine their own future.

Increased Soviet flexibility and moderation will also present new challenges. Gorbachev's policies have already gained Moscow greater access to moderate regimes such as Egypt and Saudi Arabia. Better relations with Iran -- including expanded military ties -- could also develop, but will be constrained by the situation in Azerbaijan and a number of factors.

The anti-U.S. stances of Iran and Libya probably will be slower to change, and we remain concerned about the terrorist threat those regimes pose to the United States.

Finally, I want to mention two key Middle East related issues that will continue to have a major impact on U.S. interests.

Oil. Western dependence on Persian Gulf oil will rise dramatically. By the year 2000, gulf states will supply an

GE 5 TXT203 estimated 40 percent of Western oil, up from about 30 percent today. Meanwhile, U.S. dependence is expected to rise from about 10 percent to roughly 25 percent by the end of the decade.

The Arab-Israeli peace process. If the peace process does not advance over the next several years, the Intifadah is likely to become more violent, terrorism will probably rise, and Arab pressure on the United States to impose a settlement will increase.

Latin America

In Latin America, the United States will confront widely divergent challenges, and some, including the narcotics problems that I will discuss shortly, could get worse.

Fidel Castro's regime is increasingly vulnerable to the vagaries of world change, as well as to Cuba's seriously declining economy and spreading domestic discontent. As Castro comes under growing pressure, he is likely to respond

harshly at home and internationally, and possibly take actions that could confront U.S. interests.

The guerrilla offensive last November in El Salvador was in significant part made possible by help from Nicaragua and Cuba. Despite major losses, the Marxist insurgents in El Salvador will continue to pressure the Cristiani government.

The situation in Nicaragua remains in flux as the February elections approach. The Sandinistas have used their control of government machinery to bolster their fortunes and constrain the opposition. For example, they have used state-owned vehicles for campaign purposes and distributed land and food in the hopes of winning electoral support. They not only have outspent the opposition by orders of magnitude, but they have tied up in red tape U.S. electoral aid to the opposition and independent groups.

The presence of several thousand men of the Nicaraguan resistance inside Nicaragua and the Sandinista refusal to renew a ceasefire ensure that sporadic fighting will continue through the elections. The Sandinistas have attempted to portray the opposition coalition as the unarmed wing of the resistance.

The Endara government in Panama should enjoy a relatively strong political position because of broad public support, a solid majority in the legislature, and reasonably good relations with the new security force. The opposition parties are disorganized, but some leftist and nationalist opposition eventually will emerge. Over the longer term, the government's prospects will hinge largely on its management of the troubled economy.

Transnational Issues

Weapons Proliferation
 
 

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Ballistic missiles are being developed or acquired by a growing number of countries, including some that support terrorism. This is a particularly alarming prospect because many of them are also in the advanced stages of developing nuclear, chemical, and biological warheads that could turn ballistic missiles into weapons of mass destruction. As a result, regional problems that have been of lesser policy importance to the United States could become significantly more urgent.

Most missiles likely to be fielded in the third world over the next five years will have ranges of less than 1,000 kilometers. But by the year 2000, at least three countries probably will have missiles with ranges up to 3,000 kilometers, and another three, missiles with ranges up to 5,500 kilometers.

Four of the countries developing missile capabilities already have nuclear weapons or advanced nuclear-weapons programs. And, by the end of the decade, an additional four could develop similar capabilities.

Terrorism

International terrorism will also continue to be a major intelligence concern. The main threat remains transnational terrorism emanating from the Middle East. Some terrorist groups from that region have the capability to operate in many parts of the world.

Several of the Middle Eastern governments that used to promote terrorism against Western interests -- Iraq, Libya, and Syria -- have not been as active lately. Iranian- supported terrorists are the most dangerous ones active right now.

Narcotics

In Colombia, the Barco government is utilizing some 80,000 personnel to take the fight to an increasingly vicious drug industry. This has resulted in numerous cocaine seizures and, more importantly, the extradition of 13 traffickers since last August.

Peruvian guerrillas are increasingly active in narcotics processing. Military action against the insurgents in the remote valley where 60 percent of the world's cocaine originates has had little effect. Levels of violence and the need for external assistance are likely to grow substantially.

The Counternarcotics Center that I created in 1989 is the focal point for the intelligence contribution to the battle against drugs. In supporting the antidrug effort, our strategy is to focus on the most critical links in the narcotics supply chain.

But the battle will become even more challenging. Traffickers will shift their operations to more remote areas and to nations where narcotics production is now insignificant. Global demand for drugs is growing. Successful interdiction will induce new smuggling routes,

GE 7 TXT203 and clamping down on drug money in key financial centers will encourage proliferation elsewhere.

Conclusion

In conclusion, I would like to return to more

sing global trends. There can be no doubt, for example, that the conventional military threat in Central Europe has declined. The survival of democratic aspirations in Eastern Europe, despite four decades of totalitarian oppression, is testimony to the nobility of the human spirit. These happy results are also a consequence of the steadfastness and persistence with which we and our allies have defended the principles we cherish.

At the same time, the dangers inherent in rapid and unpredictable global change will require that we remain firm and vigilant in our commitment to our nation's interests and values.